May 9 (Bloomberg) -- Nigeria’s currency may face a
“gradual depreciation” of as much as 15 percent this year with
the naira under pressure from U.S. stimulus cuts, said United
Bank for Africa Plc Chief Executive Officer Phillips Oduoza.

While the pace of depletion in Nigeria’s foreign reserves
has slowed in 2014, there is “very, very huge demand for
foreign exchange arising probably from the tapering of the
quantitative easing in the United States,” he said in an
interview yesterday at the World Economic Forum in Abuja,
Nigeria’s capital. “It could happen any moment from now, there
is so much pressure on the local currency.”

Oduoza joins executives from Africa’s biggest phone
company, MTN Group Ltd., who said the country’s central bank may
need to lower the naira’s target peg of 3 percentage points
above or below 155 per dollar at twice-weekly foreign-exchange
auctions. The currency of the continent’s largest economy
dropped 2.2 percent in the past 12 months and traded less than
0.1 percent weaker at 161 by 10:24 a.m. in Lagos.

Nigeria’s foreign-exchange reserves declined 13 percent
this year to $38 billion by May 5 as the central bank sold
dollars to prop up the naira and as oil production missed
estimates. Godwin Emefiele, who becomes the institution’s
governor in June, told the Senate in March that a devaluation of
the naira is “not an option” and would be “devastating” for
the economy.

Market Force

Pressure on the currency may still prompt a change in the
peg, Oduoza said. “It may happen and probably the market may
force that.”

Andrew Bing, chief financial officer of MTN’s Nigerian
unit, said in a May 5 interview that the currency will probably
be devalued after next year’s election because of lower-than-forecast oil exports from the continent’s biggest producer.

Companies are also being affected amid attacks by militant
group Boko Haram. The violence is a concern for investors and
it’s negatively affected UBA and client businesses in the
northeastern region of Africa’s most populous nation of about
170 million, said Oduoza.

“We have some major multinationals that use that
particular corridor to move their goods across to the
neighboring countries, that has affected their business and in
turn it has affected out business,” he said. The northeast
contributes less than four percent of the bank’s revenue, so
“the impact is very minimal,” Oduoza said.

Terrorist Disappearance

International political and business leaders attending the
forum ending today, including Chinese Premier Li Keqiang and
Bharti Airtel Ltd. Chairman Sunil Bharti Mittal, condemned the
Boko Haram Islamists who seized more than 200 schoolgirls last
month and pledged continued investment in Nigeria. The U.S.,
U.K., France and China plan to send security personnel and other
unspecified support to Nigeria to help locate the students.

As Nigeria gets foreign assistance to deal with the
insurgency, Oduoza said the insurgency may be “a phase that’s
going to pass” in the country.

“I think we are going to see a just a gradual
disappearance of these terrorist activities, if not
completely,” he said.

While investors are looking to long-term growth in Nigeria,
a southern spread of the insurgency to oil-producing region and
the commercial megacity Lagos would cause “major, major panic
across the nation,” Oduoza said.

“If it goes beyond it will definitely affect the business
and it will definitely affect foreign investors,” Oduoza said.
“It is definitely going to affect everything that we are
doing.”